The most time-sensitive action items for Massachusetts employers are:
- Before May 31, 2019, post on the employer’s premises the PFML poster provided by the Massachusetts Department of Family and Medical Leave (Department).
- Before May 31, 2019, provide individual written notices (in paper form or electronically) to the employer’s current Massachusetts workforce, including 1099 contractors in certain circumstances, of PFML benefits, contribution rates and other provisions of the law either by using the template provided by the Department or creating its own legally compliant forms of notice that explain how the PFML will fit into the employer’s overall employee benefit scheme (PFML Notice);
- For all new Massachusetts employees and contractors hired on or after June 1, 2019, issue a PFML Notice in the employee's/contractor’s primary language within 30 days of their first day of employment/service;
- Obtain from each Massachusetts employee and contractor a written statement (in paper form or electronically) acknowledging receipt of the PFML Notice or a statement indicating the worker’s refusal to acknowledge the PFML Notice;
- As soon as practicable, and in any event before July 1, 2019, elect whether to (i) participate in the PFML program via employee payroll tax withholding or (ii) adopt a private PFML plan approved by the Department, which exempts employers from withholding the PFML payroll tax.
OVERVIEW OF PFML
Beginning on January 1, 2021, the PFML law will require all Massachusetts employers to provide eligible employees and other covered individuals with: (i) up to 12 weeks of paid family leave for the birth, adoption or foster care placement of a child or because of an exigency as a result of a family member being called to active service, (ii) up to 20 weeks of paid medical leave if they have a serious health condition that incapacitates them from work, and (iii) up to 26 weeks of paid family leave to care for a family member who is a member of the Armed Forces who is undergoing medical treatment, recuperation or therapy or otherwise considered a “covered servicemember” under the PFML law. Starting on July 1, 2021, employees may also be eligible for up to 12 weeks of paid family leave to care for a “family member” with a serious health condition. In the aggregate, employees may be eligible for up to a maximum of 26 weeks of PFML leave in a single benefit year. Workers on PFML leave will be entitled to a certain percentage of their wages (as specified in the regulations), up to an $850 per week cap, which may be adjusted annually by the Department.
Who is Covered
Any employee who, over the 12 months preceding the employee’s claim for benefits, has received total wages as an employee from a Massachusetts employer that in the aggregate equal or exceed 30 weeks of pay at the rate that would apply to unemployment insurance benefits for the employee, totaling at least $4,700, is covered by the PFML law. Certain independent contractors and former employees may also have rights to paid leave but do not have job restoration rights. A “family member” is a spouse, domestic partner, child, parent or parent of a spouse or domestic partner of the covered individual as well as a person who stood in loco parentis to the covered individual when that person was a minor child or a grandchild, grandparent or sibling of the covered individual.
Comparison with the FMLA
While there is overlap between the FMLA and the PFML law (and the leaves run concurrently), there are notable differences including:
- Although the types of required leaves are comparable, the expanded definitions in the PFML law result in significantly broader eligibility.
- FMLA leave is unpaid unless the employer has policies that provide for pay; the PFML law establishes mandatory pay, through either the state-established trust fund or a private plan.
- The total amount of leave per benefit year that a covered individual can take is greater under the PFML law (up to 26 weeks) than under the FMLA (up to 12 weeks, except to care for a covered servicemember, in which case the maximum amount of FMLA leave is 26 weeks).
- Employees can be required to use sick time and other paid time off when on FMLA leave; not so with leave under the PFML law.
- Like the FMLA, leave under the PFML law is job-protected, meaning that an employee who has taken PFML must be restored to the employee’s previous position or to an equivalent position, with the same status, pay, employment benefits, length-of-service credit and seniority as of the date of leave. However, the exception to an employer’s job restoration obligation is narrower under the PFML law than under the FMLA.
- As under the FMLA, an employee may not be retaliated against for taking PFML leave. However, the PFML law provides employees with a form of super protection. During a leave under the PFML law and for the six-month period following such leave, any negative change in employment status is presumed to be retaliation. The presumption can only be rebutted by the employer showing through clear and convincing evidence that it had sufficient independent justification for taking such action and that it would have done so regardless of the employee’s use of leave.
CONTRIBUTION AND ADMINISTRATION OPTIONS
Employers may elect one of two options to satisfy contribution and administration obligations under the PFML law.
- Option 1: The law imposes a payroll tax at an initial rate of 0.63% of each employee’s qualified earnings up to the contribution limit established annually by the federal Social Security Administration, with withholdings beginning on July 1, 2019. Employers that employ 24 or fewer employees located in Massachusetts do not need to pay employer contributions and may withhold the maximum PFML contribution from employees’ paychecks. Employers that employ 25 or more employees located in Massachusetts may withhold from employees’ paychecks the entire contribution, except for a portion of the contribution allocated to medical leave, which the employer must pay, as specified in more detail in the Department’s regulations. (Employers may voluntarily contribute more than the specified employer contribution under the PFML law.) The Department has published a toolkit for employers, including a calculator for employers to estimate PFML contributions.
- Option 2: Employers may apply for a private plan exemption beginning April 29, 2019, on the state Department of Revenue's MassTaxConnect website. An employer’s plan must contain paid family and medical leave benefits and protections at least equal to the benefits and protections provided by the PFML law. The regulations permit employers to purchase private plan coverage through an insurer licensed in Massachusetts or provide the coverage on a self-insured basis. Employers may apply for an exemption from the medical leave contribution, family leave contribution, or both. Exemptions will be accepted by the Department on a rolling basis, will be effective for one year, and may be renewed annually. Although employers may apply for a private plan exemption after July 1, 2019, to avoid any tax withholding obligation employers should apply before July 1, 2019.
Employers that elect Option 1 should determine what percentage of the required contributions they will deduct from their employees’ pay (within the statutory limits) and contact their payroll tax providers or payroll departments to ensure that they comply with the PFML law’s withholding obligation by July 1, 2019. Before electing Option 2, employers should consult with employment counsel, particularly about the application to former employees and appeal rights if an employee is denied benefits under a private plan, as well as with their insurance brokers to review their current employee benefits plans and to weigh the pros and cons of self-insuring as compared to purchasing policy-based solutions.
Employers intending to apply for a private plan exemption should develop a plan document to be provided to the Department in the application process. Draft PFML regulations were issued for public comment on March 29, 2019, and final PFML regulations, which may contain additional information about the PFML law, are due from the Department by July 1, 2019.
Additional information on these topics is available at the Department’s Paid Family Leave website. In addition, members of Goodwin’s Employment group are available for compliance assistance, including with respect to the notices that must be provided to Massachusetts employees and, in certain circumstances, 1099 contractors on or before May 31, 2019.